Alibaba ups investment in auction site to US$732 million

Steven Schwankert |
Oct. 9, 2008

Alibaba.com will invest US$732 million in its popular Taobao consumer auction site over the next five years.

BEIJING, 8 OCTOBER 2008 - Alibaba.com will invest 5 billion yuan (US$732 million) in its popular Taobao consumer auction site over the next five years in an effort to shore up the company's lead in the local e-commerce market and help create new jobs, the company said Wednesday.

The company had originally announced a 2 billion yuan investment earlier this year, but felt that recent economic events created "a greater opportunity," and therefore chose to invest more, said Taobao President Jonathan Lu in an interview. "We need to be a responsible company, responsible to our users, to our sellers and to our shareholders," he said.

Taobao is China's largest consumer-to-consumer auction site. In June, the quasi-governmental China Internet Network Information Centre (CNNIC) said that 81.5 percent of China's e-commerce users had visited Taobao.com, and that of those users, 91 percent had made a purchase.

Lu said the company will use the money, over a five-year period, to improve its sales platform, on personnel, hardware and recruitment of new sellers.

Taobao also announced that it intends the investment to help create a million jobs as a result of its investment, whether it be for sellers who become self-employed, for online retailers who hire staff to handle orders or for logistics people who will be required for growing e-commerce.

Lu reversed an earlier announcement in August by Alibaba.com Group CEO and founder Jack Ma, who said that after a three-year moratorium, Taobao would begin charging fees to individual users. There will be no fees for at least another year, Lu said, nor will there be any rise for larger, commercial sellers. "Taobao's breaking even. Although our costs will likely go up, so will our sales volume," Lu said.

Alibaba.com Group is one of Asia's largest Internet companies, following the initial public offering of its B-to-B site, Alibaba.com.